Slide pp 11

An investible universe of ~250 high qualitycompanies at compelling valuation(Median market cap. US$1 .6bn)

Presented by Nancy Lee24 January 2013

All copyright Imperial Capital Limited

Imperial Capital Limited

Sustainable and Responsible Investments (SRI)

World Issues 50% of world’s population face

ecological constraints

“Humanity stands at a defining moment in history. We are confronted with a perpetuation of disparities between and within nations, a worsening of poverty, hunger, ill health and illiteracy, and the continuing destruction of the ecosystems on which we depend for our well being.”

Agenda 21 United Nations

Our Planet According to the UN,

to close the gap between developed and developing nations, under current consumption patterns, will require the resources of 2.6 planets.

BASF: Earth’s population is set to increase to 9 billion by 2050, demand of resources 3X planet can supply

World leaders .… “You cannot build shareholder value at the expense of

society, otherwise society will eventually destroy your shareholder value, Anthony Burgsman, CEO Unilever

2006 Michael Porter Mark Kramer: if approached in a strategic way, corporate social reponsibility could become part of a company’s competitive advantage.

“ CalPERS: principles are consistent with our own corporate governance efforts and in accounting for environmental and social factors to enhance our investment returns“ .

"Implementation of the Principles by the global investment community will ultimately ensure businesses who respect the environment, their community and financial stakeholders have a lower cost of capital and a competitive advantage.“ HESTA, Australia

Does God … “..he who supplies seed to the sower and

bread for food will also supply and increase your store of seed and will enlarge the harvest of your righteousness. …”2 Corinthians 9:10-11

“…your plenty will supply what they need, so that in turn their plenty will supply what you need. Then there will be equality,” 2 Corinthians 8:14

“ The wages of the righteous bring them life, but the income of the wicked brings them punishment.” Proverbs 10:16

What is SRI ?

Our belief: SRI is the cornerstone for sustainable economic development. The fundamental definition of the win-win investment concept, bringing godly principles into practice.

A holistic Investment Strategy that integrates environmental, social and governance (ESG ) criteria into investment valuation to select world-class, ethical and profitable companies. Fiduciary investment methodology that minimizes risks in all aspects while maximizing shareholders return.

Triple-bottom line An added-valued of a traditional investment strategy:

Not just philanthropy, but entrepreneurial investment approach

Captures information asymmetry when capital channeled to responsible companies Financial Values

Responsible Business – Minimize Risk Sustainable Business – Competitive Advantage

Social value: Social benefits and market needs - Vulnerable groups of

society protected Ecological sustainability – Scarce resources preserved

Investment value: Shareholders see their money’s worth - loyalty Good credit rating

Irresponsibility destroys values

The expense of responsible business is but a fraction of the cost of irresponsibility

Reputational and Financial impact given regulatory guidelines• Litigation against socially damaging products and processes• Poor corporate governance practices damages market

credibility• Consumer boycotts• Higher operating costs to which companies behind the curve

liable when new rules apply Names to Recall, lists go on

Fraudulent companies: Enron Barings (Nick Leeson) Guangnam, Lehman

Social irresponsibility: Mengnui, Petrochina, Foxconn, Philip Morris

Poor governance costly: Rio Tinto $29bln writeoff, HSBC’s money laundry issues, ibankers’ Libor manipulations

Environmental: BP oil spill

Paradigm shift of Fund Managers

Fiduciary focus Licensed profession, stewardship responsibility Due diligence in terms of independent, unbiased

asset management and ESG screening (Eurosif 2012 survey) Risky alternative products fail

to fulfill attaining sustainable returns, after 2008 tsunami, Open to sustainability themes (health/life, multi-thematic), Increase sri strategy to 67% (38% 2009)

Calvert largest US SRI house U$13bn China Environment Fund; BOC Sustainable Growth Equity Fund 2006; Aberdeen, Blackrock, Fidelity, ValuePartnersFunds

SRI Landscape

Source: Eurosif

53.7%38.6%

6.7%

0.8%

0.1%

Europe

US

Canada

Australia/NZ

Japan

2012 World Wealth Report: Eur7.8tr (US$11tr); HNWI increase %portf in sri allocation by 58% in 2010-12. Typical 15 – 20% high 40%. 2012 HNWI & Sustainable Investment study reports SRI among European HNWI rose to E1.15tr from E729bn (2009).

Global SRI market - US$7 trillion (€5 trillion) as of 2008

SRI Developments

Over 130 firms based in Asia have sustainable investment assets under management (ASrIA )

Top-performing sector funds: Thematic Biotechnology and Healthcare funds 1, 3, 5 and 10, 20 years ( Kiplinger 2012 )=>sustainable and responsible sectors

EGS criteria in industry: European Parliament legislations in pensions( 2000 –

2001 Belgium Germany Sweden, Swiss and Norway ) HK Stock Exchange, the ESG reporting Guide is

recommended practice commencing 31 December 2012, targeting obligation by 2015

Demand driven : US - 401k, Australia -Superannuation funds

Benchmark Sustainable indices raise industry standards 2000, Calvert introduced The Calvert Social

Index that measures large US based sustainable companies

2001 FTSE4Good, 2003 DJSWorldI, MSCI World/ESG Social Responsibility

Indices 2007, China 1st social responsible index

Taida Environmental Index 2010 Hong Kong Hang Seng HSSUS

Benchmark Sustainable indices

DJ Sustainability World Index

Source: Dow Jones Indexes, SAM 

Dow Jones Sustainability World Index

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 20

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 120

4‐Jan‐08

4‐Mar‐08

4‐May‐08

4‐Jul‐0

8

4‐Sep‐08

4‐Nov‐08

4‐Jan‐09

4‐Mar‐09

4‐May‐09

4‐Jul‐0

9

4‐Sep‐09

4‐Nov‐09

4‐Jan‐10

4‐Mar‐10

4‐May‐10

4‐Jul‐1

0

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4 ‐May‐11

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1

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4‐Jan‐12

4‐Mar‐12

4‐May‐12

4‐Jul‐1

2

4‐Sep‐12

4‐Nov‐12

MSCI World Index Dow Jones Sustainability World Index

Hang Seng Corporate Sustainability Index

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 20

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 60

 80

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 120

4‐Jan‐08

4‐Mar‐08

4‐May‐08

4‐Jul‐0

8

4‐Sep‐08

4‐Nov‐08

4‐Jan‐09

4‐Mar‐09

4‐May‐09

4‐Jul‐0

9

4‐Sep‐09

4‐Nov‐09

4‐Jan‐10

4‐Mar‐10

4‐May‐10

4‐Jul‐1

0

4‐Sep‐10

4‐Nov‐10

4‐Jan‐11

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4‐May‐11

4‐Jul‐1

1

4‐Sep‐11

4‐Nov‐11

4‐Jan‐12

4‐Mar‐12

4‐May‐12

4‐Jul‐1

2

4‐Sep‐12

4‐Nov‐12

Hang Seng Index Hang Seng Sustainability Index

SRI Fund stakeholders

SRI Investors

SRI FUNDGovernment ,Regulators, Rating agencies

Fund managers

Sustainable and Responsible Companies

EnvironmentalSustainability

Social Responsibility

Governance Responsibility

Community,Equality

ShareholdersMajor & Minority

Financial Valuation

Profitability

Business Sustainability

Conservation, Planet

SR Investment ScreeningNegative Screening( undesirable to social/ sustainability standards, damaging to society )

Best in class( support social or sustainability agenda, make positive contribution to society )

Genetically modified (GM) food

Reforestation, Biodiversity

Gambling, Pornography, Tobacco

Financial Inclusion, Green Buildings Affordable Housing

Weapons, Repressive Regimes

Water resources, Waste recycling, Ethical consumption, Organic food

Nuclear power Renewable EnergyAnimal Testing Public Health, Education and

training

Socially ResponsibilityEnvironmental Sustainability

Sustainable Responsibility SR Investment SCREENS: E S G

Governance Responsibility

Environmental Sustainability:Company takes responsibility to protect the environment for the society.Social Responsibility: Company undertakes initiatives in community development on top of promoting human rights.Governance Responsibility:Company complies with all rules and regulations for the issues or policy concerned and be accountable to shareholders.

Environmental Sustainability

1. Resource ( management system, project, supply chains, contingency plans, reporting )

2. Pollution Management ( control system, reduction project, supply chains, contingency plans, regular pollution audit )

3. Energy ( system, efficiency, alternative energy, audit, conservation project, supply chains, contingency plans, reporting )

4. Other Environmental Sustainability ( certification, ozone products, wildlife, carbon audit/ offset, recyclability, organic foods )

Social Responsibility

1. Community Development( donations/sponsorships, scholarships, encouragement, engagement, budget, CSR report, benchmarking )

2. Employee Benefits ( flexi time, retirement benefits, share ownership, upgrading education, day-care facilities, health-care facilities, remuneration )

3. Human Rights/ Equality ( discrimination, disabled persons, exploit staff vacation, child labour, unfair staff layoff, evaluation )

4. Safety Management ( system, certification, insurance, non-smoking environment, employer accreditation )

Governance Responsibility

1. Corporate Governance ( intercompany transactions, accounting policy, annual report, core business (MI), CEO remuneration, EPS dilution, option policy )

2. Public Accountability ( Legal action, negligence, minor fines/censure, serious fines/censure, investigation, conviction )

3. Risk management, control and compliance( recruitment, monitoring & reporting, risk policy definitions, control guidelines, contingency plans, data protection devices, code of conduct )

4. Corporate Communications ( Investor Relation’s integrity, guidance transparency )

SRI Excluded: 1 Cheung Kong

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160

Month-end January 2008 - December 2012

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As of Jan 22, 2013: $129.20Source: Bloomberg

SRI Included: 1169 Haier

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As of Jan 23, 2013: $12.36Source: Bloomberg

Slide pp 11

An investible universe of ~250 high qualitycompanies at compelling valuation(Median market cap. US$1 .6bn)

End

Disclaimer This document has been created by Imperial Capital Limited (“ICL”). for initial informational purposes only. It is not intended as an offer or

solicitation with respect to the purchase or sale of any security nor does it constitute an offer or solicitation in any jurisdiction in which such an offer or solicitation is not

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with respect to any investment program referred to herein should be made based solely upon appropriate due diligence by the prospective investor. The

investment capabilities described herein involve risks due, among other things, to the nature of the underlying investments. All examples herein are for illustrative

purposes only and there can be no assurance that any particular investment objective will be realized or any investment strategy seeking to achieve such objective will be

successful. • Any capabilities described herein are relevant only to persons who have the financial ability and willingness to accept the risks that are

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Appendix

But..Sustainability counts

Lenovo - Extends Corporate Social Responsibility to environmental

sustainability, supply chain sustainability and social investment- Ranked no. 1 in Greenpeace “Green Ranking” of electronics

industry for 2007- Targets to increase its carbon efficiency by 10% in 5 years- Allocates 1% of net income each year to social investments

HSBC- First major bank to go carbon neutral (2005)- Named “Most Sustainable Bank” by Financial Times, IFC for 2006- No need for government bailout during financial turmoil in 2008- Paying largest recorded money laundering charges U$1.9bln- To spend $290mln on money laundering preventions

US Justice Dept charge UBS $1.6bn libor manipulations; $490mln Barclays

Poor governance costly

5 HSBC and 992 Lenovo

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aJan 22, 2013: $85.20, $7.68Source: Bloomberg